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Customer Overbooking – A Car Rental Operator’s Nightmare

August 11, 2010

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This letter from a car rental operator provides an on-the-ground view of how one customer can tax system resources to the point of blowing profit right out of the water. The customer's name has been changed.

Hey Chris,
 
Here's a story from yesterday's business. The point of this story is that is it not just about controlling overbooking and getting full use out of our fleet investment. There is also a huge productivity loss with the way the car rental industry does business today - at least for any company that has a priority on trying to treat every customer with respect and courtesy, as well as being truly helpful.

I got involved with this story at about step five, with the five steps spread over a week. I started hearing grumbling from my staff about Customer T by about step three. In the end, here is how much of our time Customer T sucked up - RIGHT IN THE MIDDLE OF OUR BUSIEST SEASON:

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Mike (contact center agent): seven calls, 80 minutes
Andi (reservation specialist): six international calls to Honduras and many emails, 90 minutes
Jason (contact center manager): four lengthy phone calls, 50 minutes
Craig: conference call with customer, 20 minutes
 
That is a total of four hours of work for a rental we didn't even get, from a customer who felt perfectly comfortable jacking us around, because she had no skin in the game. OK, shame on us for not blowing her off after 10 minutes, but we really do preach customer service. We refuse to let the [bad customers] change our philosophy. 

So, here's the story. Customer T said she started shopping last week on our Web site for a rental in Honduras for this week. She saw a $19 rate for an ECAR. She did not book it because "she had some questions." She could have called our contact center to get the questions answered immediately and secure that booking. Instead, she figured she could beat the system by calling the Honduras office directly. She says she tried about five times to speak with them (I didn't include that in my time estimate above.) There could certainly be a language problem, especially when dealing with a customer like Customer T.

By Saturday, she had given up trying to work a deal directly with the Honduras office.  She was evidently trying to get something even cheaper than $19 per day. So, she called our contact center and reached Mike, one of our travel consultants. Mike heard the whole story and tried to work with Customer T. 

By that time, all cars were sold out. The only thing available was a big SUV at $70 per day. Customer T agreed to take that reservation (no deposit - big mistake), with the understanding we would put it on our waitlist for price review to try to get a discount for her, considering how we had inconvenienced her by not keeping a $19 car set aside just in case she might want it.

So we followed our normal price review process. The office was unwilling to discount the SUV because it was already a great price. Customer T kept calling Jason. At one point, he got the president of the Honduras operation on the line - I didn't include that time above either.

By Tuesday, she was headed to the airport. Now, she complained about the exact vehicle that would be supplied. A friend of hers had called the Honduras office and didn't like the vehicle they had reserved for her. So we made another round of phone calls and e-mails to try to lock in the exact vehicle she wanted. But she was still arguing that we should give it to her for the $19 rate SHE HAD NEVER CONFIRMED. 

It was at that point that I got involved and called Customer T. She was driving to the airport at that time. I was quite blunt that she never confirmed a $19 reservation and we would not be honoring that rate, but we had gotten a 10 percent discount for her. She said that was fine, but when she got to the airport she was going to call around to see if she could get a better rate from some other company. But she expected us to hold the vehicle in case she didn't find anything better. (We still had no deposit, and I should mention this vehicle would be a meet-and-greet - an agent would have to take an hour to meet Customer T at the airport.)

We told her we were canceling the reservation if we did not hear back from her in 45 minutes confirming she was actually going to take our rental. From there, she argued that she probably wouldn't be able to find anything this late, so if she didn't call we should just go ahead and send the agent with her personally selected, discounted vehicle for her.

She never called. We canceled the reservation and left a voice mail to that effect - should have done it after step one. I have no doubt she will be calling us today [complaining] about the fact there was no vehicle for her.

None of this would have happened if we simply had a deposit.

Comments

  1. 1. JT [ August 11, 2010 @ 01:54PM ]

    Taking FTC and collusion off the table for a minute, when is one of the big-guys going to stop complaining about this and actually implement a deposit policy? Sure it will cost some rentals, but I am wondering if anybody has actually studied the cost/benefit on this. I am not a car rental executive, so I am betting that somebody (if not everyone) has studied this....and since nobody is charging a deposit at the time of reservation I am left to conclude that the lost reservation cost from implementing a deposit policy must be MORE than the revenue secured from a higher reservation fulfillment using a deposit system. So we are left where we started.....with a bunch of ACRA member wishing for something that will never happen until somebody stands up to the consumer and says enough is enough.

  2. 2. Mike [ August 11, 2010 @ 03:06PM ]

    I'm confused.... how would "none of this happened if we simply had a deposit"? Had she just booked it when she could have, wouldn't you have had to give her the rate? Since when is it okay for a rental car agency to cancel a customers reservation?

  3. 3. Mike [ August 11, 2010 @ 07:11PM ]

    No-shows are really pretty easy to deal with. Just know your business and know your history. What is your no show factor? What is your walk up factor? You should know and account for it. Having a deposit is a great unrealistic idea. If the customer doesn't show up, rent the car to someone else. If the customer shows up late and you don't have a car, what can you do? Turn them away because they didn't call etc.....Some car rental agencies tout themselves as being the best customer service in the nation, yet they won't pick you up and they run out of vehicles on Monday. Your insurance company may rely on them, but I don't!!

  4. 4. Sam [ August 11, 2010 @ 07:26PM ]

    Guys, please? Are you kidding me?

    We call every client and send emails up to 1 week prior to pick up and ask for credit card # and expiry with $100 no show if or cancellation within 48hrs. Works like a charm and people appreciate it because they know we are serious about having their car available as promised. Actually Europeans are nervous when we just provide a confirmation # without CC.

  5. 5. Craig [ August 11, 2010 @ 07:48PM ]

    Of course, if she would have booked the $19 rate, then we would have honored that, even if there were no deposit, and even if we had supplied the SUV instead. If we would have required a deposit at any step of the process, the negotiation would have been done. Customer service is one thing. Playing one supplier against the other, all the way to the counter, is another matter.
    Most customers don't abuse the honor system that is still prevalent in the industry. But it doesn't take very many "Customer Ts" to make an operation unprofitable.

  6. 6. Mike [ August 12, 2010 @ 10:43AM ]

    Sam: you work at LAX right...??

    For large locations, it's just easier to rent the car to the next customer. It might be hard to get the fleet to an exact science, but it always has been. Did you know that you can't actually charge a car rental customer a no show charge for that deposit you collected if they don't show up. At least that's what I'm told. They just dispute it and you're no further ahead. Just more headaches.

  7. 7. not true [ August 18, 2010 @ 02:55PM ]

    Then how do hotels do it? The truth is we require a non-refundable CC deposit as a requirement of rental. If they wont pay, we won't reserve. We've had no shows who dispute their deposit. We dispute back, and we have won every time. We show the reservation policy, the email thread, and the credit card number.
    Not only that, we work in reverse: if we can't honor the reservation (due to a breakdown or whatever) we not only return the deposit, we pay the equivalent of the deposit to the customer. Doesn't happen very often, but the customer appreciates it when it does.
    I for one am THRILLED the big boys wont do it. They get the reputation for not being able to deliver what they promise. That's just another customer service issue that gives smaller operators like us room to operate.
    I think most decent customers would rather pay a deposit and know there will be a car waiting for them. And I would rather do business with decent customers.

  8. 8. DaveB [ November 24, 2010 @ 02:05PM ]

    A month ago was the first timke I've ever been asked to supply a credit card when making a rental reservation. The previous comments point to the real question: if it's such a problem and the solution is so simple, why aren't "the big guys" implementing a deposit policy?

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Author Bio

Chris Brown

Executive Editor

Chris Brown is the executive editor of Business Fleet Magazine and Auto Rental News. Through these publications, online newsletters, trade events and associations, Chris covers all aspects of the fleet world, including fleet management, manufacturer fleet activities, the fleet leasing industry, vehicle remarketing, rental industry news, car rental taxation and legislation.

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